Tuesday, October 5, 2010

It's tranch warfare, my friend, we're riding the yield curve
inverse and non-correlated to all but Kuala Lumpur futures,
we're cherry picking dumbells and fallen angels
pushing on a string with roller coaster swaps
seignorage on a short squeeze with fat tail risk
and tender premiums and option overlays,
no mezzanine strips or synthetic jumbo collars here,
no toxic pump and dump syndicated notes
just good old alpha replication glidepaths,
liquid derivatives with levered overhang
arbitraged for margin creep and alligator spreads
fixed and floating covenant-lite credit facilities
with active durations, junk seasoned paper
an unsecured pure play reverse refi pool of zombie banks
with workout and white knight stalking horse bid implied if distressed
and an airtight rio hedge - a counterparty category killer,
as good as the greenspan put, what the hell,
it's the quadruple witching hour, leverage is king
and quants hug the index to not back-test data mines
and chartists scale out big uglies on their bollinger bands
and value fundies kick the tires on air pocket torpedo stocks
and vulture funds sweat the burn rate on the death valley curve
and traders launder so it won't come out in the wash sale rule,
when the stop-loss circuit-breakers flash crash the chinese wall
and they all turn to barefoot pilgrims on a dead cat bounce,
foaming the runway before the suicide pill,
they take a bath, take a flier, take a report,
they spend their TARP bonuses on a macaroni defense,
become liability-driven, benchmark-agnostic, caught in liquidity traps,
like a currency basket bid whacked to break the buck,
what a barrier to entry, a stub quote sucker's rally,
it's not accounting noise, this time,
where else they gonna look to write their term sheet
than the sure-fire hair cut of basis points
for their information ratio, their tracking error,
their stochastic countercyclical spread metrics
hell, they'll exercise a covered call before
they'll off-load that native beta, where else they gonna go
for rolling excess returns than subordinated debentures,
the simple stuff, the proverbial green shoots of a soft landing?
It's pretty basic, buy high, hedge risk, there is no money
at the end of the day, there's only trust, brother, you and me.